VEF Board Chairman Allison Honored

On April 12, 2005, the Stanford Graduate School of Business honored VEF Board Chairman Herbert Allison Jr. with its Excellence in Leadership Award. Now chairman, president, and CEO of TIAA-CREF, Allison served for 28 years as a leader at multiple levels of management at Merrill Lynch and is widely recognized for his contributions to both the corporate world and the community.

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NEW YORK - As a naval officer in Vietnam at the tender age of 24, he was put in charge of officers who outranked him. By night he risked his life conducting nighttime patrols along shallow rivers and dark coves and by day he commanded all Navy vessels along 200 miles of coastline.

Herb Allison learned very fast that leading people, particularly in stressful situations, is one of the hardest things you can ever do. Yet in the years since then, Allison has had the opportunity to become very good at his craft.

Now chairman, president, and CEO of TIAA-CREF, he served for 28 years as a leader at multiple levels of management at Merrill Lynch and is widely recognized for his contributions to both the corporate world and the community. On April 12, the Stanford Graduate School of Business honored Allison with its Excellence in Leadership Award. At the New York award dinner, Allison shared his reflections on his four-decades-long career.

The realities of war, said Allison, "dampened my lust for causes" but whetted his appetite for more leadership responsibility. While still in Vietnam, he told himself that if he lived out the year, he'd go to business school. By the fall of 1969, the Yale philosophy major was back at his parents' home near Pittsburgh packing up to drive cross-country to Palo Alto.

At Stanford, Allison said, he received a superb education in all of the quantitative, analytical, and people skills he's needed over the past 35 years. Probing the strengths and weaknesses of financial models for valuing assets, critiquing the real-world applicability of formulas, and acquiring new techniques such as linear programming was, he said, "serious, intellectually rigorous work." His classes also introduced him to concepts that applied not only to business but also to decision-making in other areas of life Maslow's hierarchy of the human needs and McGregor's theories of leadership, among them.

"We Stanford grads were far ahead of other MBAs because we knew how to probe issues and assumptions how to question and analyze," Allison said. Forgoing the immediate gratification of landing an "impressive" job, he joined the investment banking division at Merrill Lynch, correctly sensing he would be handed more responsibility and have the opportunity to advance more rapidly. "Thanks to a Stanford education, I started my career with exceptionally strong technical and analytical skills. That's what got me noticed at first. In fact," he laughed, "I performed a level of due diligence that my bosses found almost bizarre."

Flush with the entrepreneurial spirit Stanford had also instilled in him, Allison helped start the company's first investment banking office in Europe, and went to Iran to help start the firm's first business in the domestic capital markets outside the United States.

As his career progressed, Allison came to see that the "soft skills" that Stanford had been a pioneer in emphasizing were far more important than the concrete disciplines of finance and accounting in terms of business success. "To understand why, you need look no further than the scandals that have engulfed one company after another in recent years," he observed. "Virtually all of them can be traced to breakdowns in the organization's culture."

After rising to become president and COO of Merrill Lynch, Allison sought new vistas. "My dad, who passed away just a few months ago, always told me: 'If you're comfortable in what you're doing, move on,'" he said. After serving as a national finance chairman for U.S. Sen. John McCain's presidential campaign, in 2000 Allison became CEO of the startup Alliance for Lifelong Learning, a joint venture of Oxford, Stanford, and Yale universities aimed at developing college-level online courses. "That allowed me to link my lifelong passions: business and academia," he said.

At the helm of TIAA-CREF since 2002, Allison is leading a reorganization and new initiatives to sustain into the future the Fortune 100 company, a provider of financial services to educators, research organizations, and medical and cultural fields. "We've found that you can't change one part of the organization without changing every other aspect of the way we do business." Pausing, he added, "But I already knew that, because, of course, I learned it at Stanford 35 years ago."

Along the way, Allison has worked closely with Kien Pham, MBA '85, who escaped by boat from his native Vietnam at age 19, went on to have a successful career, and is now helping build better relations between Vietnam and the United States. Pham and Allison have partnered on the Vietnam Education Foundation, a federal agency that provides scholarships to Vietnamese college graduates so they can obtain advanced degrees in the United States.

Allison concluded with a refrain of praise for his alma mater: "Literally, not a day goes by that I don't draw on all what I learned from this school. I'm deeply grateful for how the experience shaped my life and my career."